In an effort to meet the objectives and targets set out in the Paris Climate Agreement there is a growing call to divest from fossil fuel industries and instead invest in clean and renewable climate solutions. Doing so is not only likely to help transfer funding from fossil fuel industries to green solutions but is also expected to foster entrepreneurship, innovation and lead to sustainable development.

To promote such investments and provide expertise on how all types of investors can effectively invest the DivestInvest initiative was established in January 2014. According to its website, it launched with 17 foundations and $1.8 billion of assets under its management, and “Calls on international, family, and individual investors to hold ourselves accountable for the impacts of our investments.” It calls on fossil fuel investors to take their pledge and “Stop investing in climate change, drop coal, oil and gas from [their] investment portfolio and [to then] roll a portion of [that] portfolio into climate solutions like clean energy, sustainable agriculture, local business and many more.”

At the nation state level, Ireland, In January 2017, made history by becoming the world’s first country to fully divest public money from fossil fuels. The United Kingdom’s Independent newspaper reports that “The Irish Parliament passed the historic legislation in a 90 to 53 vote in favour of dropping coal, oil and gas investments from the €8bn (£6.8bn) Ireland Strategic Investment Fund, part of the Republic’s National Treasury Management Agency.”

Deputy Thomas Pringle, who was responsible for introducing the bill, was quoted as saying “This principal of ethical financing is a symbol to these global corporations that their continual manipulation of climate science, denial of the existence of climate change and their controversial lobbying practices of politicians around the world is no longer tolerated.” He added “We cannot accept their actions while millions of poor people in underdeveloped nations bear the brunt of climate change forces as they experience famine, mass emigration and civil unrest as a result.”

Both within and across nation states, many companies, institutions and individuals are also pledging to divest from fossil fuels irrespective of whether their governments are doing the same. A global report produced by Arabella Advisors, and released in December 2016, on the one-year anniversary of the Paris Climate Agreement, found that “To date, 688 institutions and 58,399 individuals across 76 countries have committed to divest from fossil fuel companies, doubling the value of assets represent in the last 15 months.” Divestment from fossil fuel companies totalled more than $5 trillion with pension funds and insurance companies representing the largest sectors committed to divestment.

The then United Nations Secretary-General, Ban Ki-moon, is quoted by The Guardian, as commenting at the time the report was released that “It’s clear the transition to a clean energy future is inevitable, beneficial and well underway, and that investors have a key role to play.” Commenting on the role of finance in this clean energy future Ki-moon said “Investments in clean energy are the right thing to do and the smart way to build prosperity for all, while protecting our planet.”

However, not all companies are committing to divestments. One such example is the Commonwealth Bank of Australia (CBA), the country’s second largest bank, which is currently the subject of a Greenpeace campaign against it called ‘Commbank: Stop Funding Coal.’

Greenpeace believes that CBA “Is funding projects which are putting [Australia’s] globally renowned Great Barrier Reef in grave danger.” It also claims that CBA, instead of supporting fossil fuel investments by loaning billions of dollars to fossil fuel projects, should rather “Create new jobs in renewable energy and help transition [Australia’s] workforce to the industries of the future.” Greenpeace has set up a petition, addressed to CBA CEO Ian Narev, calling on CBA to stop making such investments. To date, almost 86,000 people have added their names to the petition and it remains open for others to also sign.

In addition to the Greenpeace petition, Kim and Guy Abrahams – shareholders of CBA for over twenty years – are also applying pressure on the bank to divest from fossil fuels and to report on the climate change risks they face. On Tuesday 8 August, lawyers at Environmental Justice Australia who are representing the two shareholders, filed papers against CBA. The Guardian reports that “The case will be the first anywhere in the world to test in court how companies are required to disclose climate change-related risks in their annual reports, and follows calls by shareholders, regulators, and central banks around the world for greater clarity.”

Guy Abrahams, who is Chief Executive of the not-for-profit organisation Climate Inc. said via a statement seen by The Guardian, “We bought Commonwealth Bank shares more than 20 years ago as an investment in our children’s future. We are deeply concerned about the serious risks climate change poses to the environment and society. The bank should tell investors about the risks climate change will have on its business.” While it is only the beginning of the case, and it is also not yet known, when the court will be ready to make a ruling, what is evident is that it does have the potential to have huge implications for how businesses are required to deal with climate change.

The progress made to date in ensuring divestments from fossil fuels and investments in green and renewable climate solutions has been promising. Over $5 trillion worth of funds attracted through divestments, in just one year, have the potential to make significant impacts for millions of people across the world and to contribute to countries achieving their Paris Climate Agreement targets. Despite this, further work is required and this will require increased amounts of finance. What is also evident is that not all of this finance will be raised through fossil fuel divestments and that other funders and innovative funding approaches and mechanisms will be required. A multi-stakeholder, multi-approach response is required to ensure that the world effectively transitions to a zero carbon and sustainable future.